Correlation Between Ford and China Union
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By analyzing existing cross correlation between Ford Motor and China Union Holdings, you can compare the effects of market volatilities on Ford and China Union and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ford with a short position of China Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and China Union.
Diversification Opportunities for Ford and China Union
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and China is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and China Union Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Union Holdings and Ford is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ford Motor are associated (or correlated) with China Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Union Holdings has no effect on the direction of Ford i.e., Ford and China Union go up and down completely randomly.
Pair Corralation between Ford and China Union
Taking into account the 90-day investment horizon Ford is expected to generate 3.16 times less return on investment than China Union. But when comparing it to its historical volatility, Ford Motor is 1.03 times less risky than China Union. It trades about 0.0 of its potential returns per unit of risk. China Union Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 402.00 in China Union Holdings on October 15, 2024 and sell it today you would lose (30.00) from holding China Union Holdings or give up 7.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.57% |
| Values | Daily Returns |
Ford Motor vs. China Union Holdings
Performance |
| Timeline |
| Ford Motor |
| China Union Holdings |
Ford and China Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and China Union
The main advantage of trading using opposite Ford and China Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, China Union can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in China Union will offset losses from the drop in China Union's long position.The idea behind Ford Motor and China Union Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| China Union vs. Hua Xia Bank | China Union vs. Postal Savings Bank | China Union vs. Unisplendour Corp | China Union vs. Bomesc Offshore Engineering |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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